Every business is vulnerable to risks, both from their mistakes and the actions of their employees. Without some form of protection, companies may be held liable for these losses, which is why commercial insurance or bonds are often necessary. While each of these options provides protection from losses caused by theft, employee misconduct, and accidental damage, there are some important differences every business owner should understand.

How Insurance Works

An insurance policy is essentially a guarantee that the insurer will pay for covered losses as long as the insured continues paying their premiums. For instance, if you own a retail location and thieves steal a significant portion of your inventory, the insurance company will compensate you for your losses. Similarly, if one of your employees accidentally causes an auto accident in a company vehicle, the insurer will pay for the damage on your behalf. Essentially, insurance is a contract between two parties: your business and the carrier.

How Commercial Bonds Differ

Unlike insurance, a bond is an agreement to protect others from losses. If a member of your organization inadvertently causes damage to another party, either an individual or another business, the bond company will provide compensation up to the limits of the bond. For instance, if one of your employees steals from a client, the bond will repay the victim, but you will be responsible for paying back the bond company in full. While insurance protects against expected losses, bonds work to shield principles from the unexpected.

Integrity Insurance Solutions is San Marcos, TX’s leading provider of commercial insurance and bonds, with clients in a broad array of industries. As an independent agency, they work with many of the country’s leading carriers, giving them an almost limitless variety of options to choose from. Visit their website now to learn more about their commercial insurance and bond services, like their Facebook page for more tips, or call (512) 396-2211 to discuss your organization’s needs today.